WASHINGTON — Money matters. And more money matters more.
A recent survey by the Employee Benefit Research Institute and Matthew Greenwald & Associates confirms what employers have suspected: Money is a more powerful incentive than anything else to motivate workers to participate in defined contribution plans.
The two Washington-based organizations surveyed 252 retirees and 1,011 workers. Just more than half of the workers surveyed were eligible to participate in employer-sponsored retirement plans — about the same as the national average.
But here's the kicker: 72% of those workers not now contributing to their employer-sponsored retirement plan said they would, if employers chipped in up to 5% of their pay. But when the proffered employer match is capped at 3% of pay, the incentive for employees to contribute drops as well, the survey found — only 51% of workers not currently participating said they would put money in with a 3% match.
According to Elizabeth Christie, an associate researcher at Matthew Greenwald, 18% of those surveyed who are eligible to participate don't do so.
The survey "documents for the first time that non-participants are overwhelmingly saying, ‘Bring it on, bring it on. We need this help,' " said Dallas L. Salisbury, EBRI's president.
But, the survey also points out that for some workers, inertia outweighs the reward. Thirteen percent of those not participating said their employers match up to 5% of pay, while 14% said their employers match up to 3% of pay.